Monday, May 16, 2011

De Beers appoints new chief executive

De Beers has ended a prolonged leadership search by hiring a French engineering executive with no experience in diamonds, mining or South Africa.

The South Africa-based diamond miner appointed Philippe Mellier as chief executive on Monday. Mr Mellier pursued a career at Ford Motor and Volvo before becoming president of Alstom Transport, the train-making division of the French engineering group.

Nicky Oppenheimer, De Beers’ chairman and guardian of his family’s 40 per cent stake in the company, told the Financial Times that experience in the diamond industry was not an important part of the selection process.

“We have plenty of experts at running mines. We have plenty of experts in marketing diamonds,” he said. “The key thing is that Philippe has run world-class operations and substantial capital projects, and has experience dealing with joint venture partners.”

Privately owned De Beers took 10 months before selecting an outsider, the first to take on a job previously given only to South Africans groomed over a lifetime of service to Anglo American, which owns 45 per cent of De Beers.

Mr Mellier joins De Beers at a time when it has returned to profitability, with cash flow of $943m last year compared with $34m in 2009. But it has slipped to second place in global diamond production after Alrosa, its Russian state-owned rival.

Under Gareth Penny, the previous chief executive, it sold off its old South African mines while expanding its mines in Botswana. A 50-50 joint venture with the Botswanan government – De Beers’ third-largest shareholder – is the main profit driver for the company.

“Mr Mellier’s first challenges are going to be the Botswana relationship and keeping all the best people in place,” said Des Kilalea, diamond analyst at RBC http://www.blogger.com/img/blank.gifCapital Markets.

Mr Oppenheimer said that Mr Mellier would bring a “new pair of eyes” to De Beers. “This is a good thing for any business. Certainly in De Beers, over the past 125 years, we have not done that enough.”